US jobs report drives stocks higher, Pintrest plummets

Stocks are driving higher this afternoon thanks to the largely positive jobs report from the US.

The non-farm payrolls figure showed that 128,000 jobs were added last month, which comfortably topped the 89,000 forecast. The September figure was revised higher from 136,000 to 180,000, which added to the bullish sentiment. Average earnings came in at 3%, while the unemployment rate ticked up to 3.6%. The news jolted stocks higher as it is clear the largest economy in the world is still in good health. Continental equity markets rallied in October on the back of the Brexit deal, so today’s positive announcement from the US ensured that November got off to a good start.

Lookers warned on profits for the second-time in less than four months, hence why the stock sold-off. Last year the group registered an underling pre-tax profit that exceeded £60 million, as of today the firm expects this year’s figure to be roughly £20 million. In addition to the disappointing forecast, the company confirmed that Andy Bruce, CEO, will sept down with immediate effect. Lookers cited difficult market conditions as well as squeezed margins for today’s profit warning. The car trade in the UK as well as around the world is slowing and Pendragon are in the same boat as Lookers, as the firm has issued profits warnings in recent years. Car dealerships will need to carefully manage their inventory as demand is likely to remain subdued in the medium-term. Inchcape are in the red too.

TP ICAP shares hit their highest level since July 2018 on the back of a positive update. Quarterly revenue jumped by 17% when compared with the same period last year. Adding to the solid revenue figures, the firm confirmed its full-year guidance. Volatility in the financial markets has ticked up a little when compared with recent years, which has helped the inter-dealer broker. The past couple of reporting seasons have shown that major banks have seen improvements in trading revenue – which has tied in with the latest numbers from TP ICAP.

Crest Nicholson were hit by a downgrade from UBS. The bank cut its rating to neutral from buy, and the price target was lowered to 390p from 450p.

US

The S&P 500 plus the NASDAQ 100 have both set record highs on the back of the jobs report. The labour market continues to be in rude health. Most importantly, average earnings are 3%, while the CPI rate is 1.7%, so workers continue to get a nice increase in real wages. There are reports that progress is being made with regard to intellectual property rights plus currencies – so things are ticking along nicely with the US-China trade talks.

The ISM manufacturing report for October was 48.3, which was an improvement on the previous update of 47.8 – which was a 10-year low.

Exxon posted stronger-than-expected figures. Quarterly earnings tumbled by 49% on account of weaker oil prices. Adjusted EPS were 75 cents while the consensus estimate was 67 cents. Revenue was $65.05 billion, which marginally topped forecasts. The upstream revenue undershot expectations, while the downstream division as well as the Chemicals operation topped forecasts. The drop in the oil price has hit oil majors like BP plus Royal Dutch Shell, but it is encouraging to see that Exxon are performing well in chemicals as well as the downstream unit – which has offset the weak oil prices.

Pintrest shares sold-off sharply following the company’s disappointing quarterly update last night. Average revenue per user was 90 cents, while the consensus estimate was 91 cents. Active monthly users topped forecasts, but traders are more interested in the revenue related metric. High usership is all well and good, but the firm needs to prove it is deriving funds from the interactions. The revenue guidance undershot forecasts too.

Alphabet, Google’s, owner, has agreed to acquire Fitbit in a deal that is worth roughly $2.1 billion. The tech giant is adding another string to its bow, and it is an addition to the lifestyle products it offers. Some people are worried that tech titans already have too much information on the general public, and this move plays into that narrative.

FX

GBP/USD is higher this afternoon on the back on opinion poll that puts the Tory Party in front of the Labour ahead of next month’s general election. The Conservatives are viewed as being pro-business so traders are buying back into the pound. As we have learned in recent years, opinion polls can’t be fully trusted, so the pound might struggle to make major gains.

AUD/USD has pushed higher as the better-than-expected manufacturing data from China overnight assisted the Australian dollar. The greenback is a little softer across the board despite the respectable jobs report. The slightly positive sounds in relation to the US-China trade situation is helping too.

Commodities

Gold is a touch lower as the solid US jobs data encouraged traders to take on more risk, which has prompted them to drop assets like gold. The fresh record in the S&P 500 underlines the bullish feeling in the markets, so it is not a major shock that gold has lost ground.

WTI plus Brent crude are pushing higher this afternoon. The tick higher in the Caixin survey of Chinese manufacturing has lifted sentiment in the oil markets. The mood surrounding the China-US trade talks has helped too. The well received US non-farm payrolls report is also a factor is oil’s rally.

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